Shareholders in Coal Investments, the group headed by Malcolm Edwards, the former marketing director at British Coal, have been warned that profits this year will be below expectations due to higher than expected development costs.

The group is currently spending heavily on equipment to get its mines, many of which have been lying idle for years, up and running.

Speaking at the annual general meeting yesterday Mr Edwards said the group had made major progress with the redevelopment of its mines but that some of its developments had been delayed.

Analysts immediately downgraded their profits forecasts for the year. Frank Watts at stockbrokers Charles Stanley shaved his full-year forecast from around pounds 10m to between pounds 2-4m - but maintained his pounds 25m forecast for the following year.

Shares in Coal Investments were marked down 10p to 88p on the news.

Sources close to the group said the decision to make a statement yesterday was taken to try to quieten market rumours about its progress.

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